The company recently got $3M investment. I’m being offered $152k salary and 2% equity, vested over 4 years. Is this good?
My thinking is that 2% of $3M is about $60k, so I could treat that as an extra $15k per year. But if I look at the valuation based on that investment, it is probably worth 5x that, like an extra $75k per year. All in all it is over $200k compensation, which I’m grateful for, but it’s on par with a tech job at a big tech company. Are these reasonable assumptions, or am I missing something?
Issuing more shares is how dilution is done for new investment, typically. Existing shareholders give up a % of the company via dilution, but hold on to the number of shares they had before. Their existing shares just represent a smaller chunk of the company after investment. I can see how my explanation was not clear on what is being given up, and I don’t think giving up actual shares happens often, if ever.
On a side note, startups do sometimes reserve shares for future investors, i.e. hold it themselves until disbursed. Typically when a new investment round is imminent.